Why subscribe to OFS?
Here are a few reasons for you to subscribe to PSU OFS:
OFS is a good cost effective mechanism:
OFS is a highly cost effective mechanism for both the seller as well as the buyer of shares. Importantly, most companies offer discount on the floor price to retail investors. This becomes one of the main reasons for retail investors to participate in the Offer for Sale process. The entire sale happens at a single price hence there is no impact cost. Impact cost is the extra you have to pay in case of huge demand for shares, which drives up the prices.
OFS mechanism saves valuable time
OFS mechanism is a completely automated process that happens through a system based bidding platform and involves very less paperwork. Hence, it saves valuable time for promoters and the investors.
A more convenient mechanism compared with FPOs
OFS mechanism is a much more convenient process compared with the traditional follow-on public offer (FPO) mechanism. One of the biggest benefits of OFS compared with FPO is that in OFS, there is no need for a company to issue a lengthy prospectus and wait for applications from subscribers/investors. In fact, time taken by a company is the least between the application of shares and allotment of shares in OFS. This is because the share being already listed all information about the company is in public domain.
High transparency – the main essence and benefit when you subscribe to OFS
Generally, there have been many instances in the past where the retail investors have suffered big losses owing to manipulation in the allotment process of IPO/FPO. This is where OFS comes in highly handy for retail investors. In addition to having least possible paper work formalities, the entire OFS process is highly transparent, since it is based on real-time, system based bidding platform.
In an OFS, you can place multiple orders
One of the biggest benefits you will have as a retail investor when you subscribe to OFS is that you can place as many bids as you want as a single buyer. However, in case of retail investors, if the bid values across all the exchanges exceed Rs. 2 lacs, all the retail bids will be rejected.